The communications regulator says it is eradicating billing malpractice that has led to thousands of dollars being directly debited from customers' bank accounts without sufficient warning.

The Australian Communications and Media Authority is working with the telco industry's ombudsman to crack down on questionable direct debit practices by some smaller telcos. It wants phone companies to give customers the prescribed 10-days' notice if they plan to charge more than expected.

On Monday it said major companies such as Telstra, Optus and Vodafone should deliberately slow down mobile data speeds to further curtail bill shock.

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Last week ACMA issued a formal warning to mobile provider Live Connected because it breached the Telecommunications Consumer Protection (TCP) Code's provisions related to direct debit. Live Connected did not provide the requisite notice before deducting excess charges from a customer's account. It also took credit management action over amounts that were still being disputed by customers. The specific amounts in question were more than $1000.

ACMA believes any incorrect deductions could potentially cause financial hardship for the customer, and it wants to stamp out non-compliant behaviours.

"These investigations are designed to send a strong message to providers that their direct debit practices must comply with the TCP Code," ACMA chairman Chris Chapman said.

Crafted in 2012 as a response to the public's backlash over bill shock, the TCP also aims to ensure that customers can verify charges before funds are debited from their bank account.

The collection of late bills and bad debts has the biggest impact on the most vulnerable customers, Australian Communications Consumer Action Network CEO Teresa Corbin said, and she encouraged ACMA to continue looking at credit management issues.

"Credit management usually becomes an issue for someone after a number of traumatic life events, like a loss of job, relationship breakdown or illness. To then be pursued by debt collectors over a missed telco bill is the last thing people in this situation need," Ms Corbin said.

The Telecommunications Industry Ombudsman (TIO) tipped off ACMA in relation to Live Connected's behaviour. ACMA plans to target a number of smaller telcos over direct debit breaches.

Last quarter, the TIO reported that almost 20 per cent of the 35,756 complaints were in relation to billing and payments, and almost half of these were in relation to "credit management".

ACMA has upped its enforcement game in recent years because consumers are demanding higher levels of service from their telcos, according to Western Australia Greens senator Scott Ludlam.

"It's not that ACMA doesn't have the power, it's more that, historically, it has been reluctant to enforce," Mr Ludlam said. "However, things have started to change for the better in recent years. Users are getting smarter, there's more competition out there than there used to be, and some of the name-and-shame carries enormous reputation risk."

The crackdown follows other recent TCP enforcement efforts, including taking action against three telcos, Gazal Telecom, Telcomo, and UTel Networks, which contravened the TCP Code by transferring customers without authorisation. If Gazal Telecom and Telcomo fail to comply with the TCP, ACMA could move the Federal Court to impose a $10,200 penalty per contravention.

Since the TCP's inception in 2012, ACMA has given 10 directions to comply and issued 107 formal warnings about non-compliance.

Last September, law firm Allen Linklaters published a one-year review of the TCP, and said that while Australia's three largest service providers demonstrated high levels of compliance with the complaints handling processes, the industry as a whole "needs to do more than merely tighten regulation in order to strengthen customer confidence".

8 comments

I set up an independent, monthly payment, from my bank to Optus, equal to the contract payment. I told Optus that I did not have confidence in them as they had made so many billing mistakes over the past 18 months . They retaliated with a monthly "Non- Direct Debit Fee " A FEE for What ?? That's right they charge a $ 2.20 fee if you do not let them help themselves to your bank account.

In March the mobile contract expires and we are taking our three accounts elsewhere.

Commenter

marko of manly

Location

Manly

Date and time

January 28, 2014, 5:17PM

Not to mention an added fee for 'over the phone' credit card payments.What's next? An extra admin. fee for charging an admin. fee ?? Tosh!

Commenter

Kel

Date and time

January 29, 2014, 10:44AM

iiNet has no other option to pay other than direct debit. No BPay, nothing. Very annoying for those of us who want to manage our own finances and not have money yanked out of our account on a date of THEIR choosing ...

Commenter

James

Date and time

January 29, 2014, 7:28AM

Well your a fool for signing up with them mate....didn't you know this when you signed up and if they did this after you signed up im sure you could have done something about it...there is a telecommunications ombudsmen you could have taken this up with.Its not just telco's trying this on....a lot of bills have bombarded me with direct debit requests and this above story is the reason why I have ignored everyone of them.

Commenter

Cambo

Date and time

January 29, 2014, 8:50AM

Yes. I got my first and only bill shock over 10 years ago. Now everyone seems to have learned that you need to be on a plan at home and on everyone's mobile that is at least double what you normally use. And a lot of people buy their handsets out right- it costs a bit more but it is good insurance against not being able to move to a cheaper plan when they come out.The regulation has helped to clarify thing and enhance competition. But just like with the banks- competition only works if people are prepared to move.

Commenter

busker

Date and time

January 29, 2014, 8:43AM

A lot of the "cost" of providing a consumer service (phone, Internet, energy etc.) is actually in the billing and collection of debts, that is why most of these cheaper deals specifically have Direct Debit so they can be cost effective.

If you don't like it go and find a more expensive service that requires manual invoicing and payment, because that costs the company far more to do than Direct Debit so if you want it you will have to pay for it - and that's how it should be.

Commenter

DC

Location

Melbourne

Date and time

January 29, 2014, 9:33AM

Not true. Check out Amaysim. Post paid by Bpay.

Commenter

The Voice

Location

Newcastle

Date and time

January 29, 2014, 9:55AM

This is why I avoid direct debit. Always have, always will.

Honestly, what kind of moron gives their personal financial details to some multi-national conglomerate ?? All, well most of us, I suppose. Shame that.